In a stunning setback, Prime Minister Benjamin Netanyahu's hard-line bloc fared worse than expected in a parliamentary election Tuesday, exit polls showed, possibly forcing the incumbent Israeli leader to invite surprisingly strong moderate rivals into his government and soften his line toward the Palestinians.

TV exit polls showed the hard-liners with about 61 seats in the 120-seat parliament, a bare majority, and the counts could change as actual votes are tallied.

The unofficial TV results had Netanyahu winning only 31 seats, though he combined his Likud Party with the far-right Yisrael Beitenu for the voting. Running separately four years ago, the two won 42 seats. He expected to increase that total by running together, but the combined list's poll results dipped steadily throughout the three-month campaign....